Albanian economy grew by 4% in the first half of 2024, marking a positive development in the country’s economic recovery. The growth is driven by increased household consumption, investments, and a boost from tourism.
Bank of Albania Governor Gent Sejko shared the update during a press briefing on November 6. He also noted that inflation had decreased by 2%, primarily due to the strengthening of the national currency, the lek. Additionally, the central bank reduced its key interest rate by 0.25%, aiming to keep inflation in check and support further economic expansion.
“The economy grew by 4% in the first half of the year. Inflation fell by 2% due to the stronger lek. We expect continued and stable economic growth,” Sejko said, adding that the central bank’s efforts have contributed significantly to maintaining price stability.
Despite the easing of inflationary pressures, the Bank of Albania remains cautious. Economic indicators for the first three quarters of the year align with expectations, with growth continuing on a positive trajectory. The central bank has also kept interest rates low to help businesses and households cope with rising costs.
Inflation and economic outlook
Inflation has decreased by 2%, primarily due to falling oil prices and slower rent growth. Albania has also benefitted from a decrease in the prices of imported goods, as well as improved exchange rates for the lek.
Looking ahead, Sejko projected that inflation would remain near current levels for the rest of 2024, gradually returning to the target rate next year. The central bank expects the economy to continue expanding, with sustained job growth and rising wages. However, global economic volatility remains a potential risk.
Encouraging growth across sectors
The Albanian economy’s growth is supported by the services sector, particularly tourism, as well as a rise in construction. However, industrial production has seen a slight contraction, reflecting slower growth in the manufacturing sector.
With strong financial balances and increasing credit activity, Albania is showing resilience. The country’s banking system remains healthy, and credit growth has accelerated to 16.8% year-on-year by the third quarter, the highest in over a decade.
Future expectations
The Bank of Albania expects continued steady growth in the coming months, with potential for further inflation reduction. Governor Sejko reassured that the central bank would maintain a flexible approach, adjusting policy as needed to safeguard the economy’s stability.
